Paving the way for setting up of a regulator for the insurance sector, the government on Thursday introduced the long-awaited Pension Fund Regulatory and Development Authority (PFRDA) Bill in the Lok Sabha. The move aims at providing social security to millions of employees through efficient intermediation of long-term household savings.The proposed legislation, however, steered clear of making any mention of a ceiling on foreign direct investment (FDI) in the sector. The government will separately notify the ceiling.
The Bill also allows for part investment in stock markets although Left leaders are against equity investment option given to investors pension scheme.
The Bill, which provides powers to sectoral regulator PFRDA to oversee multiple pension funds in the country, will largely follow the suggestions made by a parliamentary standing committee in 2005.
The committee is currently examining an insurance Bill to raise the sectoral FDI to 49% from the current 26%.
The PFRDA is yet to get statutory powers as the Bill pertaining to that effect lapsed in Parliament with the dissolution of the last Lok Sabha in 2009. The interim PFRDA is functioning since 2003 through an executive order.
Unlike other regulators such as the Reserve Bank of India, the PFRDA does not have statutory status or the quasi-judicial powers of other regulators. Hence, if one of the entities regulated by the PFRDA violates norms, it cannot impose penalties.
The New Pension System, introduced by the government in January 1, 2004, was opened to all citizens of India from May 1, 2009 on a voluntary basis.